Exiting Microsoft EA: Strategy, Licensing Impact, and Transition Paths

Exiting Microsoft EA

Executive Summary: Exiting a Microsoft Enterprise Agreement (EA) is a major licensing decision that requires careful planning and strategy.

This article outlines why many organizations are moving away from the traditional 3-year EA, what licensing changes to expect after leaving, and how to transition smoothly to alternatives like the Cloud Solution Provider (CSP) program or a Microsoft Customer Agreement.

The goal is to help CIOs and IT procurement leaders understand the timing considerations, cost impacts, and best transition paths when an EA ends.

Read how to negotiate your Microsoft EA.

Why Exit a Microsoft EA?

Changing Needs and Flexibility:

Many enterprises find that the EA’s rigid 3-year structure and upfront commitments no longer suit their needs in a cloud-centric era. Business environments change rapidly – companies may downsize, grow, or shift strategy within a year.

Under an EA, you’re locked into a set number of licenses (or a monetary commitment for cloud spend) and can only increase that commitment annually (via true-ups). If your usage decreases, you cannot reduce your license counts until the EA term ends.

This often leads to paying for over-licensing, i.e., more licenses or cloud capacity than you use. In contrast, newer licensing models emphasize agility: the ability to scale down and up on short notice.

The inflexibility of an EA can be a costly drawback for organizations anticipating workforce fluctuations or project-based usage of Microsoft services.

Cost Pressures:

EA volume discounts (typically 5–15% based on tier) are attractive, but they come at the cost of large upfront or annual payments. Today’s IT budgets favor predictable operational expenses over big capital expenditures.

With an EA, you commit to a sizable three-year spend, which might include software you won’t fully utilize. By exiting the EA, enterprises seek to adopt pay-as-you-go models where they “only pay for what they use.” This can avoid sinking budget into unused licenses or cloud credits.

Microsoft’s Licensing Shift:

Another reason some companies are forced to exit is Microsoft’s strategy shift. Starting in 2025, Microsoft is raising the bar on EA renewals – customers below a certain size (reportedly 2,400 users in many cases) will no longer be eligible to renew a traditional EA. Microsoft is nudging these mid-sized customers toward its modern purchasing models.

So, if your organization has 1,000 seats, you might not even be offered an EA renewal; instead, Microsoft will direct you to sign a Microsoft Customer Agreement or buy via a CSP partner.

This global shift (affecting both U.S. and EMEA enterprises) signals that the “one-size-fits-all” EA is being phased out for smaller enterprises. Cloud-first licensing and automated digital agreements are becoming the norm.

In summary, many organizations are considering exiting their EA as their renewal date approaches, whether by choice (seeking flexibility and cost control) or by necessity (Microsoft’s policy).

Licensing Impact Post-EA: What Changes?

Exiting an EA will change how you purchase and manage Microsoft licenses, with several important impacts to be aware of:

• Volume Discount and Pricing: You will lose the built-in volume discount tiers of the EA. Under an EA, pricing levels (A, B, C, D) give larger organizations progressively lower per-license costs. After exit, if you move to a month-to-month CSP or direct purchases, you typically pay standard rates (or slightly discounted by a partner). For example, an Office 365 E3 license might have been ~$30/user/month under EA after discount, but post-EA could revert closer to the $32 list price (unless a partner offers a modest discount). Enterprises need to evaluate if the cost difference is significant. The flexibility gains often outweigh a small unit cost increase, especially if you can drop 10% of unused licenses and avoid paying for them altogether. (In essence: EA gives a discount but makes you pre-pay for a fixed quantity; pay-as-you-go might be full price, but you’re not paying for unused capacity.)
• Software Assurance Benefits: Enterprise Agreements bundle Software Assurance (SA) on all licenses, which provides benefits like version upgrades, training vouchers, planning services, and a home-use program for Office. You may lose these perks if you exit the EA and do not purchase SA through another program. Continuous updates are included for pure cloud subscriptions (Microsoft 365, Azure, etc.), so losing SA may not be a big issue. But if you still use on-premises servers or perpetual licenses, note that SA coverage will lapse at the end of the EA. For instance, if you had Windows Server licenses with SA for the right to upgrade to newer versions, post-EA, you’d either continue paying SA via a new agreement (like Open Value or an MPSA) or forego future upgrades and support extras.
• Perpetual License Rights: If your EA was a standard (perpetual) EA, you typically own the licenses perpetually at the end of the term for the products you had fully paid for. These remain valid even after exiting (though without SA updates). However, suppose you were on an Enterprise Subscription Agreement (EAS). In that case, those licenses expire with the EA term, meaning you must exercise a buy-out option or discontinue using the software. Most organizations renewing an EA historically would roll forward their entitlements, but double-check which licenses you keep in an exit scenario. Plan for any mission-critical software to ensure you have proper licenses in the future (either by buy-out or replacement with subscriptions).
• Product Availability and Use Rights: Certain product offerings and use rights in an EA might not have exact equivalents when you switch to another channel. For example, you might have gotten device-based Microsoft 365 licenses or special bundles under an EA. The choices in CSP or direct subscriptions could be slightly different (e.g., certain Government or Education SKUs, or device-based subscription plans, might not be available through all channels). Another subtle issue, especially in EMEA, is the Microsoft 365 Teams bundling. Due to regulatory changes, new agreements signed via Microsoft’s new commerce might require Teams to be licensed separately (for new customers). An EA-to-MCA transition could technically make Microsoft treat you as a “new” customer in systems, meaning your Office 365 suites might exclude Teams (requiring an add-on purchase). Enterprises should be aware of these nuances – essentially, not all legacy EA options cleanly translate one-to-one in the new model. Engage with Microsoft or a knowledgeable partner early to map out any potential gaps (for instance, if you currently use a legacy product or enjoy grandfathered rights under EA, confirm how to retain similar functionality post-exit).
• Support Model: EA customers typically purchase Premier/Unified Support separately for Microsoft products (often at a percentage of their EA spend). When exiting the EA, your support model may shift if you go with a CSP partner. Under CSP, the partner provides frontline support (often included in their service or at a lower cost than Microsoft’s direct support). This can be a positive change, as many organizations find partner support more responsive and tailored, whereas Microsoft Unified Support can be quite costly. However, if you choose to go direct (MCA with Microsoft), note that no support is bundled – you’d need to maintain a separate support agreement or pay per incident. So, part of the licensing impact is who you call for help: leaving EA often means saying goodbye to Microsoft’s support contract and hello to partner-based support, which can save money, but you’ll want to vet the partner’s capabilities.

In summary, exiting an EA involves trade-offs: you lose some discounts and packaged benefits but gain the freedom to right-size your licenses.

The key is to prepare for those changes, budget for potential list price costs, decide how to replace any critical SA benefits, and ensure that support and service availability do not lapse as you change licensing programs.

Read How to Negotiate Microsoft EA Discounts and Concessions.

Transition Paths After EA: CSP vs. Microsoft Customer Agreement

Once you decide not to renew your EA, you have two primary paths to continue licensing Microsoft products: the Cloud Solution Provider (CSP) program via a partner, or a Microsoft Customer Agreement for Enterprise (MCA-E) directly with Microsoft.

Both paths allow you to buy Azure, Microsoft 365, and other products, but differ in execution.

Below is a comparison of these two common post-EA paths:

In short, CSP is like having a licensed solutions advisor on call, whereas MCA is a do-it-yourself direct purchasing route. Both ultimately let you consume Microsoft’s cloud offerings once your EA ends, but the experience and support structure differ.

Which to choose?

An MCA might be appealing if your IT team has strong Microsoft licensing expertise and prefers direct control (and perhaps if you have a very large spend where you can negotiate directly with Microsoft on certain concessions).

However, many mid-sized enterprises prefer the CSP route because the partner handles a lot of complexity.

Notably, suppose your organization spans multiple regions (US and EMEA). In that case, you can find a global CSP partner to consolidate billing in one currency or provide local billing in a region. This flexibility can simplify your life.

Also consider internal resource costs: managing licenses and optimization in-house (with MCA) vs outsourcing some of that to a partner (CSP).

One caution: ensure your chosen partner is reputable and meets your needs. You’ll want a CSP partner with proven Microsoft expertise, good support SLAs, and possibly one that understands your industry.

Interview a few partners before EA expiration and discuss migration plans and fees (most CSPs don’t charge extra for license management; they earn a margin from Microsoft).

Also, confirm that the partner can handle any specific requirements you have (for example, if you use specialized Azure services or have regulatory needs in EU data centers, etc.).

Timing Considerations and Planning Your Exit

Successfully transitioning off an EA without service disruption or surprise costs requires timing the move correctly and thorough preparation.

Here are key timing and planning considerations:

• Align with EA End Date: Plan your new licensing to start the day after your EA expires. Microsoft EAs often have a 30-day grace period after expiration during which you can still renew or adjust licenses before services shut off. Use this buffer, but ideally have your new CSP or MCA by the EA end date. This avoids double paying. For instance, if your EA ends on June 30, aim to have all users migrated to CSP licenses effective July 1. Planning a transition mid-term is not recommended because you’d be paying for the EA regardless; leverage the natural endpoint to switch and avoid overlapping costs.
• Renewal Negotiation Window: Plan 6–12 months before the EA expiration. This is typically when Microsoft will approach you about renewal. Instead of a straightforward renewal, use this window to evaluate usage data and engage potential CSP partners. If you decide to exit, you may still want to negotiate a short-term extension or special arrangements with Microsoft if extra time is needed (for example, a 3-month extension to finalize a CSP migration). Microsoft sometimes allows an EA to go into an “extended term” on a month-to-month basis if requested, but note this could be at less favorable pricing or terms. It’s better to avoid needing an extension by planning early.
• Data and Admin Prep: Before the EA ends, export all relevant data, such as Azure usage reports, license assignment lists, and invoices from the EA period. You might lose easy access to historical EA info once you transition to a new program (e.g., the EA Azure portal might be replaced by a new billing portal). Having those records is crucial for auditing and forecasting. Additionally, ensure you have the right admin access: identify who in your organization has EA Administrator or Enrollment Manager roles, and work with them to facilitate the transition. They must coordinate with the CSP partner or set up the new agreement.
• Technical Transition Steps: The good news is that services and user accounts do not fundamentally change when you switch licensing channels. Your users’ Office 365 accounts, mailboxes, and Azure resources – all remain in place. The change is in the backend billing/ licensing assignment. However, there are still technical steps to plan:
  • In Azure, if you’re moving to a CSP, your Azure subscriptions under EA may need to be transferred to the CSP’s tenant. Microsoft has a process for subscription transfers. This can be done relatively quickly (often within a day or two around the expiration). Still, it requires coordination and certain prerequisites (for example, the Azure subscriptions should be on the newer Azure Resource Manager model, and your CSP partner needs a reseller relationship link to your tenant).
  • If you have Azure Reserved Instances or Savings Plans under the EA, note that these do not transfer automatically. You’ll want to repurchase those under the new model to avoid losing cost savings. In practice, you might let the EA-based RIs expire at the EA end and then re-buy new RIs via CSP on day one.
  • For Microsoft 365, transitioning licenses can be as simple as reassigning users from EA-based to CSP licenses in the admin portal. You can even pre-place orders with the CSP so that licenses are ready. On the cutover day, you remove the EA license assignment and assign the new ones – the user experience remains uninterrupted. It’s wise to plan this for off-peak hours or a weekend, just in case, but many have done it with zero downtime for users.
  • Communicate with end-users (if relevant) about any visible changes. Usually, there are none—perhaps the only difference users might see is a change in how services are labeled or slight differences in portal links. But essentially, Exchange, Teams, SharePoint, etc., continue running without the user knowing licensing has changed in the background.
• Phased vs Big Bang: If your environment is complex (multi-tenant, lots of services), consider a phased transition. For example, you could move Azure subscriptions first (especially non-production ones as a pilot), then Office 365 workloads. However, if timed at EA end, most organizations do a “big bang” switch on the date because it’s cleaner with billing. If you do phase, be cautious of running two agreements in parallel – you don’t want to accidentally double-purchase licenses. One practical approach some take is to move a subset of less critical users or a department to CSP a month or two early as a trial (if licensing costs are small for that subset) to gain confidence in the process, then migrate the rest at term-end.

Real World Example:

To illustrate, a mid-sized US company with 1,200 users decided not to renew its EA in 2025. By planning six months out, they analyzed that only ~1,050 of those 1,200 Office 365 licenses were actively used (150 were for ex-employees or idle accounts). Under their EA, they were paying for all 1,200 every year.

They engaged a CSP partner and switched to monthly Microsoft 365 subscriptions. Post-EA, they immediately stopped paying for those 150 excess licenses – an instant cost reduction.

Even though the per-license cost was about $1 higher outside the EA, the ability to drop unused licenses and scale down in slow periods led to roughly 10% annual savings overall. Additionally, they avoided a $500K upfront Azure commitment that Microsoft had proposed in an EA renewal; instead, they now pay Azure monthly, and if their cloud usage dips, their bill dips.

This kind of outcome is typical when the EA’s volume discount is modest and the organization has been over-provisioned “just in case.”

The key is that their timing was aligned: They had the CSP environment ready to go the day the EA ended, and they informed Microsoft well ahead of time that they would not renew.

As a result, the transition was smooth with no service interruption or surprise bills.

Recommendations

• Start Early: Evaluate your EA renewal options at least 6 months in advance. Inventory your current licenses and cloud usage to know what you need going forward.
• Engage Stakeholders: Involve procurement, IT, and finance teams in exit planning. Ensure everyone knows the plan to avoid auto-renewal by default. Notify Microsoft or your reseller of your intentions in due time.
• Choose the Right Partner: If you opt for CSP, conduct due diligence on potential partners. Look for a provider with experience transitioning EA customers, strong support, and the services you need (cloud optimization, billing in your currency, etc.).
• Align to Contract End: Time the move to coincide with your EA expiration. Avoid mid-term termination, which could incur penalties. Use any EA grace period wisely to finalize the switch without service loss.
• Archive Licensing Info: Before the EA lapses, export all records (licensing reports, true-up documentation, Azure usage data). This ensures you have historical data and proof of licenses for future audit or reconciliation needs.
• Test the Transition: Where possible, do a pilot. For example, transfer a non-critical Azure subscription or move a small group of users to the new licensing model early. Learn from that pilot to refine your full migration approach.
• Mind Your SA and Legacy Needs: Plan how to handle Software Assurance benefits or legacy products. If you rely on training vouchers or upgrade rights, budget for those services separately post-EA or explore Microsoft training alternatives.
• Communicate Changes: Inform your users (if they will notice any changes) and IT support staff of the licensing transition date. Although ideally transparent, internal teams (like helpdesk) should be ready to field questions if something needs reactivation or a user sees a licensing message.
• Monitor Costs Closely: After exiting the EA, keep a sharp eye on monthly consumption and costs in the new model. The first few months will set the baseline – ensure that bills match expectations and that no unexpected charges occur. Optimize licenses continuously (e.g., remove licenses immediately when an employee leaves, since you’re no longer in a fixed contract).
• Document the New Agreement: Finally, maintain documentation of your new licensing agreements (CSP contract details or MCA terms). While simpler than an EA, having those records for compliance is important. Also, track renewal dates of any annual subscriptions in the new model so nothing lapses inadvertently.

Read Microsoft EA for Cloud-First Organizations.

FAQ

Q1: What’s the biggest mistake enterprises make when exiting a Microsoft EA?
A1: The biggest mistake is not planning far enough ahead. Some companies wait until a few weeks before their EA expires to decide what to do, which is risky. This can lead to rushed decisions, like rolling into an unwanted renewal or scrambling to set up a new licensing program at the last minute. Start planning early, involve the right stakeholders, and have your next steps in place well before the EA end date.

Q2: Can we partially move to CSP before our EA ends (a gradual transition)?
A2: You can, but it requires careful coordination. Microsoft’s rules typically prevent double-dipping (e.g., you shouldn’t license the same user twice under EA and CSP). A common approach is to move a pilot group or a specific Azure workload to CSP as a test, but keep in mind you’re still paying for those licenses under the EA until it ends. You’d essentially be paying extra during the overlap. A cleaner strategy is to use the EA until most things expire, then switch everything immediately. Partial moves are useful if you need to test feasibility or if your EA has different end dates for different products (less common).

Q3: What happens if our EA expires and we do nothing – will our users lose access immediately?
A3: If an EA expires with no renewal or replacement, there is typically a 30-day grace period where online services continue to work. After that, any cloud services (Office 365, Azure) would enter a disabled state (access eventually cut off if no new licenses are provided). On-prem software rights would cease to be covered by SA (and subscription licenses would expire). Relying on a grace period is not a plan – it’s a safety net. It’s crucial to have new licenses (via CSP or other agreement) provisioned before that grace period ends to ensure uninterrupted access for users.

Q4: We have many on-premises licenses with Software Assurance on our EA. Can a CSP or MCA cover those?
A4: This is a bit tricky. CSP primarily deals with subscriptions and cloud services. It now offers perpetual licenses for some on-prem products, but Software Assurance (SA) is not sold via CSP. Microsoft Customer Agreement (MCA) similarly doesn’t include SA. If you have on-prem servers with SA that you want to keep updated, one option after EA is an Open Value agreement or MPSA for those, which allows SA maintenance renewals. This does fragment your contracts (you’d have one for cloud via CSP/MCA and one for on-prem SA). Some organizations let SA lapse and instead move to subscription versions (e.g., using Azure or licensing for those servers). Assess each on-prem product: if it’s critical to keep upgrade rights, talk to a licensing specialist about the best vehicle post-EA.

Q5: Will Microsoft negotiate anything for us if we’re not renewing the EA?
A5: Surprisingly, yes – if you’re a large customer, Microsoft may still offer incentives to keep your business, even if not through an EA. For example, they might offer discounted Azure credits or transition pricing if you sign a Microsoft Customer Agreement. If you’re below the new EA size threshold, they won’t keep you on an EA, but they want you on MCA or CSP, so there could be one-time offers (like free migration support or temporary price lock-ins). It’s worth honest discussion with your Microsoft account rep: explain that you’re considering CSP vs direct, and see if Microsoft will grant any concessions for going direct. Then compare that with partner offerings. In short, even when exiting, some negotiation can sometimes yield benefits.

Q6: What are the typical cost differences when moving from EA to CSP?
A6: It varies, but here’s a rough idea: Many organizations moving to CSP find that per-user license costs are within 0–10% of their EA prices. The EA might have given a small discount per license, whereas CSP might be at list price (unless a partner passes on a discount). For Azure, EA might have given you a consumption discount or special pricing, which CSP might not match exactly. However, the ability to turn off unused services in CSP often compensates for the loss of the discount. For example, if you had 100 licenses at $10 under EA ($1,000/month) vs 100 licenses at $11 via CSP ($1,100/month), a 10% higher unit cost. But if you realize you only need 90 licenses some months, you drop 10 and pay $990, immediately erasing the difference and even saving slightly. Each case is unique; it’s wise to model your scenario with actual numbers. Don’t forget to factor in support costs – under EA, maybe you paid $100K/year for a support contract; under CSP, that might drop to near $0 (built into partner service). Those savings can be significant.

Q7: If we plan to exit, how will we handle compliance and true-ups in the final year of EA?
A7: You should still perform your final-year true-up as normal for the EA. Count any increases in usage up to the last day of the EA term and report them. You’ll have to pay for any overage during the EA term. (Exiting doesn’t absolve you from true-up – it’s part of the contract for the period you were in it.) One strategy, however, if you know you’re exiting, you might be able to be more aggressive in reducing usage before the end. For instance, if some secondary products or trials are deployed, consider scaling those down before the final true-up count. Also, opt out of any auto-renewal or extended terms in writing. Microsoft sometimes has an “extended term” clause where an EA can quietly continue month-to-month if not explicitly terminated. Send a formal notice if required, stating you do not intend to renew. After exit, Microsoft may reserve the right to audit your compliance for the EA period, so maintain documentation of what you had licensed through the EA to cover any later questions.

Q8: Will our Microsoft Enterprise Agreement reseller help us with this transition?
A8: It depends. If your EA was through a Large Account Reseller (LAR) or Licensing Solution Provider (LSP), their business was tied to selling you EA licenses. Some resellers are CSP providers and can transition you to their CSP offering. If so, they will happily keep you as a customer on CSP. However, if they do not handle CSP or you choose a different partner, their incentive to assist may be lower. Regardless, you should inform your current reseller of your decision. They can at least ensure Microsoft is aware and assist in closing out the EA paperwork. If you have a good relationship, they might advise on the best steps (even if you’re not renewing with them, maintaining good will is in their interest should you need their services in the future). In any event, the heavy lifting of the transition (reassigning licenses, transferring Azure subscriptions) will likely involve Microsoft engineers and your new CSP partner more than the old reseller.

Q9: Are there any tools to help automate the move from EA to CSP?
A9: Microsoft provides some assistance tools for partners – for example, the “transition to new commerce” tool can programmatically move Azure subscriptions from EA to CSP. For Office 365 licenses, scripts can reassign users in bulk. Many CSP partners have done these transitions and have internal scripts or playbooks. As a customer, your focus should be on data gathering and planning; the execution often involves some manual steps (like clicking a transfer acceptance link for Azure, or running a PowerShell script to swap licenses for 1,000 users). It’s not entirely one-click, but it’s not as daunting as it may seem with an experienced hand. During partner selection, ask about their migration methodology – a good partner will have a clear migration runbook.

Q10: What if we regret leaving CSP after a year? Can we go back to an EA?
A10: If your organization grows or you miss some EA benefits, it’s possible to sign a new EA later if you meet Microsoft’s eligibility and minimum requirements at that time. Be aware of Microsoft’s current direction: they are making the EA club more exclusive (preferring only larger enterprises). So if you have 5,000+ users and significant spend, Microsoft would welcome you back into an EA or a similar enterprise program (like an enterprise-specific MCA deal). They may steer you to stay with CSP/MCA if you’re smaller. Also, note that pricing and terms in future EAs could differ from your old contract. In essence, you’re not forbidden from returning to an EA, but the trend suggests fewer organizations will do so. A hybrid approach is common: some large companies maintain an EA for certain products (or regions) but use CSP for others (for example, an EA for core Office 365 for headquarters, but CSP for subsidiaries or Azure dev/test accounts). You have the flexibility to craft a mixed strategy if needed.

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